Things looking up for Sydney and NSW
Things looking up for Sydney and NSW
By Terry Ryder
Investors can expect better results from Sydney and New South Wales this year, after several lean years of mediocre growth performance.
The January edition of ANZ Bank's Australian Property Outlook says the NSW economy and Sydney house prices are finally showing signs of life after languishing for much of the past three years.
"Price growth remains patchy, with softer conditions on the western fringe while inner and eastern suburbs have moved ahead strongly," says ANZ's head of financial system analysis, Paul Braddick.
"The recovery has been buoyed by a marked tightening of housing market conditions, with the vacancy rate falling to a 19-year low of 1.4% in September.
"In addition, the NSW economy accelerated in 2007 and is now once more growing at a respectable rate."
Braddick says residential development activity remains "extremely depressed", with home building approvals at their lowest levels on record. Recent interest rate rises, along with expectations of more to come in 2008, suggest recovery in home construction remains some way off.
Population growth has remained positive, despite a net loss through interstate migration, because of strong overseas migration into NSW (55,000 new people in FY2007). Demand for housing, therefore, has remained solid.
"Consequently, new housing supply is now falling well short of underlying housing demand and looks likely to do so for a number of years. Our projections suggest a critical and rapidly-expanding shortage of housing in Sydney will provide significant support to house prices and rents."
Braddick says tightened conditions have already seen rents accelerate, with a 24% increase evident in advertised rental rates.
"With vacancies set to push even further below record low levels in the year ahead, ongoing rapid rental growth appears inevitable."
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This article was written by Terry Ryder & is taken from the Investor Alert page of the Hotspotting website
http://www.hotspotting.com.au. We highly recommend this website for people interested in real estate.
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